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sausage king of Chicago posted:Not sure if this is the right place to put this, but I have three nephews who are all under seven years old. When I turned 25(or around there, can't remember exactly) my mother gave me a bunch of savings bonds she, my grandmother, etc all bought me when I was little and I cashed them in. They all appreciated a good amount in value and I thought it was a really cool thing, and I'd like to do something like that for my nephews - buy them some each year for their birthday's so when they get older they have a nice pile of cash.
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Dec 23, 2019 00:57
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Hoodwinker posted:You'll want to look into a UGMA account. You can invest the money in the account but it becomes the beneficiary's money once they're of age. You could also ask if the parents started a 529 and help contribute to that so they have money for University.
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Dec 23, 2019 01:29
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I'm doing my yearly rebalancing and wondering if I'm too heavy in to international stocks. Currently, my allocation is: 45% US 36% International 9% REIT 10% bonds Anyone have any thoughts? I realize that US/International markets are going to be somewhat correlated.
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Dec 23, 2019 21:51
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Residency Evil posted:I'm doing my yearly rebalancing and wondering if I'm too heavy in to international stocks. Currently, my allocation is:
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Dec 23, 2019 22:08
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Hoodwinker posted:Picking your allocation is about diversification to reduce correlation and the right risk profile to match your timeline. If you feel like you're meeting both of those, then your allocation is fine. Do you feel like you're too heavy on international stocks because of correlation or improper risk profile? Partly due to Bogle saying to keep international stocks to 20% of equities, and realizing that I'm at 44%, but if I'm honest with myself, it's because of the ridiculous few years that US stocks have had (yes I know this is a bad reason).
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Dec 23, 2019 22:12
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Residency Evil posted:Partly due to Bogle saying to keep international stocks to 20% of equities, and realizing that I'm at 44%, but if I'm honest with myself, it's because of the ridiculous few years that US stocks have had (yes I know this is a bad reason). Stolen from Bogleheads: Two very knowledgeable expert sources wrote: In February 2014, Vanguard Research published a 15-page study titled, "Global equities: Balancing home bias and diversification." This paper concludes that although no one answer fits all investors, the empirical and practical considerations suggest a reasonable starting allocation to non-U.S. stocks of 20%, with an upper limit based on global market capitalization, subject to the investor's perspective on the short- and long-term trade-offs. Our mentor, Jack Bogle, in Common Sense on Mutual Funds (published in 2010), wrote 26 pages about international investing with this conclusion: "So, I'd approach this relatively new wave of international investing with caution, and stick to my recommendation that international funds--including BRIC funds--do not exceed one-fifth (20%) of an investor's equity position." So there we have it: Vanguard researchers believe no less than a 20% international stock allocation is reasonable. Jack Bogle believes no more than a 20% international stock allocation is reasonable. When 20% is the only percentage of stocks that these two expert sources agree on, I feel comfortable suggesting that 20% figure.
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Dec 23, 2019 22:18
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Residency Evil posted:Partly due to Bogle saying to keep international stocks to 20% of equities, and realizing that I'm at 44%, but if I'm honest with myself, it's because of the ridiculous few years that US stocks have had (yes I know this is a bad reason).
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Dec 23, 2019 22:18
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If I wanted to keep some REIT exposure, would it be reasonable to do say, 10% Bond 10% REIT and then split that remaining 80% in to 80% US, 20% International?
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Dec 23, 2019 22:31
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Residency Evil posted:I'm doing my yearly rebalancing and wondering if I'm too heavy in to international stocks. Currently, my allocation is: Go to the Vanguard website: https://investor.vanguard.com/mutual-funds/target-retirement/#/ Find the target date fund that most closely matches the date you plan to retire or plan to be financially independent. Click the "Holdings and Management" tab. You'll see the percentages that the Vanguard experts are allocating people across US Stock, US Bond, International Stock, International Bonds.
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Dec 23, 2019 22:43
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dexter6 posted:Not gospel, but I've shared this trick with several people and they've appreciated it. It's at least a starting point... This is the confusing part: Vanguard weights them pretty heavily (60/40 US/International). I guess I'm not too crazy since REITs are part of my allocation and those are going to be US centric.
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Dec 23, 2019 22:47
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Vanguard recently posted an article claiming that they expect international equities to perform much better over the next few decades. I don’t have it handy, although it was linked in thread. Grain of salt, can’t predict the future unless you’ve got that magic congressional touch, but that might explain the weighting.
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Dec 23, 2019 22:57
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This isn't related to the current discussion, but I'm working at a company now that lets me do the mega backdoor Roth so I now get to take all of the contributions I would normally make to a taxable account and turn them into Roth contributions through the magic of tax law arbitrage. I'm very excited with this turn of events.
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Dec 23, 2019 23:04
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Hoodwinker posted:This isn't related to the current discussion, but I'm working at a company now that lets me do the mega backdoor Roth so I now get to take all of the contributions I would normally make to a taxable account and turn them into Roth contributions through the magic of tax law arbitrage. I'm very excited with this turn of events. We keep asking about this but are getting nowhere fast. A lot about safe harbor and high income employees and stuff. I guess we just signed a 3 year deal with vanguard as well so we are committed to that or something. One day it will happen I am sure.
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Dec 23, 2019 23:12
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Hoodwinker posted:This isn't related to the current discussion, but I'm working at a company now that lets me do the mega backdoor Roth so I now get to take all of the contributions I would normally make to a taxable account and turn them into Roth contributions through the magic of tax law arbitrage. I'm very excited with this turn of events. Yeah I'm jealous of this. Last time I asked one of the Vanguard reps the guy more or less implied this was most common in small engineering companies with sperglords. I imagine it increases plan management costs.  Back to my important question: maybe I'm ok leaving my allocation as-is?
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Dec 23, 2019 23:15
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Residency Evil posted:Yeah I'm jealous of this. Last time I asked one of the Vanguard reps the guy more or less implied this was most common in small engineering companies with sperglords. I imagine it increases plan management costs.
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Dec 23, 2019 23:38
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Residency Evil posted:Yeah I'm jealous of this. Last time I asked one of the Vanguard reps the guy more or less implied this was most common in small engineering companies with sperglords. I imagine it increases plan management costs. If it's in a taxable account, just stop buying international until your percentage drops to ~20% of your equity exposure, I wouldn't sell and incur capital gains taxes just for the sake of rebalancing. If it's in a tax-advantaged account I'd rebalance, no reason not to rebalance there.
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Dec 24, 2019 00:00
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spwrozek posted:We keep asking about this but are getting nowhere fast. A lot about safe harbor and high income employees and stuff. I guess we just signed a 3 year deal with vanguard as well so we are committed to that or something. One day it will happen I am sure.
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Dec 24, 2019 01:40
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the rmd age is changing from 70 1/2 to 72 https://www.forbes.com/sites/jamiehopkins/2019/12/18/why-the-secure-act-makes-2020-the-year-of-missed-rmds-from-iras/#1da044b4827d there's some complexity to the transition so if you are a 70 y/o goon you should probably go read up on it
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Dec 24, 2019 01:44
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sausage king of Chicago posted:Not sure if this is the right place to put this, but I have three nephews who are all under seven years old. When I turned 25(or around there, can't remember exactly) my mother gave me a bunch of savings bonds she, my grandmother, etc all bought me when I was little and I cashed them in. They all appreciated a good amount in value and I thought it was a really cool thing, and I'd like to do something like that for my nephews - buy them some each year for their birthday's so when they get older they have a nice pile of cash. I just went through pretty much the same thing, so here's my thoughts on the matter: Yeah, savings bonds (series-EE bonds are probably what you're thinking of) used to be a great way to grow, preserve, and pass on wealth. My grandmother bought some for me throughout my childhood, and they all had a nice 2-4% rate on them; an absolutely wonderful investment for a child. For some reason, EE bonds have had their rate cut to an objectively terrible 0.1%, however this comes with the caveat that the bond is guaranteed to double in value in exactly 20 years, giving it an effective rate of 3.5% (but only if you redeem in exactly 20 years). Any less than that, and you only get the 0.1% interest rate, and longer than that and you're bond will only continue to grow that the paltry 0.1%. I can see larger / institutional investors benefiting from this, having an additional tax-advantaged space to store money for exactly 20 years, but it really seems to screw over the average American. There are also series-I bonds that are guaranteed to beat inflation by a small amount. Probably not exactly what you were thinking of, but also probably the closest thing available to what you were thinking of. I bonds are also a great way to teach kids about inflation on a very practical level. A UGMA is also available if you want to buy the kid(s) some Total Stock Market every year. Probably the better option if they're younger, especially with 10+ years for the investment to grow. If you go the UGMA / UTMA route, be sure to do it at a competent institution with good customer service. My family had some individual stock in a UTMA for me with some establishment that eventually got bought by Merrill Lynch. After I claimed my account (my "financial advisor" was very unhelpful), I had to have my account transferred from Merrill Lynch to Merrill Edge (because I didn't have enough $ invested to qualify for a Merrill Lynch account or something like that), then sell all the stocks (to avoid their account transfer fee), just to get the money into a Vanguard account. That's a lot of hassle just to buy some $VTSAX. literally this big fucked around with this message at 07:23 on Dec 24, 2019 |
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Dec 24, 2019 07:21
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I'm doing a cash-out refi to help finance a kitchen renovation. $40,000 will be coming out of that refi. Our projections are looking like costs will run anywhere from $40k to $60k depending on the wonderful surprises one finds when you take down walls and ceilings and running electrical that meets modern building codes vs. whatever was in 1950 at the house's construction. That cash-out refi is where I want to be in terms of debt since we're moving from a 30 to 15 year mortgage. I don't want to add more cash out from equity. If I want to sell stocks from my long-term brokerage account, is there a general guideline as to how I decide on what to sell? e.g. higher value and less shares, lower value and more shares, older holdings, very old holdings (like 8+ years), stuff that's less than a year old, etc.?
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Dec 24, 2019 14:47
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MJP posted:I'm doing a cash-out refi to help finance a kitchen renovation. $40,000 will be coming out of that refi. Our projections are looking like costs will run anywhere from $40k to $60k depending on the wonderful surprises one finds when you take down walls and ceilings and running electrical that meets modern building codes vs. whatever was in 1950 at the house's construction. Sell things that are long term cap gains and will keep you roughly in balance. If you sell stuff with more basis (less gains, still long term) you will owe less taxes, if you sell stuff with a higher % of gains you will need to sell 15% more (pro-rata to the gains) to cover taxes. I would sell out as much long term cap gains as I could to lock in historically low rates.
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Dec 24, 2019 15:15
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Doesn’t it make sense to sell lots with short term losses first, then long term gains?
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Dec 24, 2019 16:00
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Sobriquet posted:Doesn’t it make sense to sell lots with short term losses first, then long term gains?
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Dec 24, 2019 18:34
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Hoodwinker posted:Yes, this is definitely true. I think the assumption (maybe incorrectly) was that all of the lots were gains. If selling today and only indexing it probably isn't really a bad assumption. Maybe some international stuff would be down.
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Dec 24, 2019 18:43
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spwrozek posted:If selling today and only indexing it probably isn't really a bad assumption. Maybe some international stuff would be down.
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Dec 24, 2019 18:46
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Hoodwinker posted:I agree but it's still good to know what the general priorities are. For sure. We are kind of in a weird works right now that people are not really seeing losses. It will be interesting to see what happens in the next few years.
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Dec 24, 2019 18:55
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H110Hawk posted:Sell things that are long term cap gains and will keep you roughly in balance. If you sell stuff with more basis (less gains, still long term) you will owe less taxes, if you sell stuff with a higher % of gains you will need to sell 15% more (pro-rata to the gains) to cover taxes. Personally, I would sell anything with a loss right now, this year, and get the immediate tax benefit, and then sell any LTG stuff right in January so you can wait ~15 months to pay taxes on it. It's not really a huge deal in the end, because 15% is so low. $20k with 50% gains would be $10k, so the taxes are only $1.5k. Sitting on that for a year nets you like $150 expected returns 
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Dec 24, 2019 19:20
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Sobriquet posted:Doesn’t it make sense to sell lots with short term losses first, then long term gains? Correct. Precoffee financial advice. paternity suitor posted:Personally, I would sell anything with a loss right now, this year, and get the immediate tax benefit, and then sell any LTG stuff right in January so you can wait ~15 months to pay taxes on it. It's not really a huge deal in the end, because 15% is so low. $20k with 50% gains would be $10k, so the taxes are only $1.5k. Sitting on that for a year nets you like $150 expected returns This is getting into min/max territory, sell when you need to divest the risk. This is arguably now unless you are willing to bet on no down swing in a week.
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Dec 24, 2019 19:45
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Mad Wack posted:the rmd age is changing Also if you are inheriting an IRA the rules for distribution have changed, you have to drain it within 10 years. Also if you have a small business there's a nice little tax credit for setting up auto enroll 401k for your business so go do that.
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Dec 24, 2019 20:19
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H110Hawk posted:This is getting into min/max territory, sell when you need to divest the risk. This is arguably now unless you are willing to bet on no down swing in a week. Yeah, normally I wouldn't advocate for waiting to sell things due to tax implications, but at this point you're only four trading days away. But agreed. First always consider your risk
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Dec 24, 2019 21:03
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moana posted:Also if you are inheriting an IRA the rules for distribution have changed, you have to drain it within 10 years. Did they do away with the life expectancy method of calculating RMDs? Does this affect people with existing established Inherited IRA/Inherited Roth IRA accounts they are already taking RMDs from?
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Dec 24, 2019 21:49
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I'm 29 and have $26k in my 401k, $20k in VVI, and $12k in cash. I have no debts. I put about $12k into a stock purchase program every 6 months through work and get about $3k profit on it. I then have $15k showing up in my bank account every 6 months. What would you recommend doing with this money? Looking for both safe options and riskier/interesting options like investing in property/businesses/etc.. Also, I've got no current plans to buy a house, have a baby, or make any other personal investments.
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Dec 24, 2019 22:42
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Tyro posted:Did they do away with the life expectancy method of calculating RMDs? Does this affect people with existing established Inherited IRA/Inherited Roth IRA accounts they are already taking RMDs from?
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Dec 24, 2019 23:02
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moana posted:Existing inherited IRAs are grandfathered in under the old rules, this is for people dying after this year. Thanks for the reassurance 
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Dec 24, 2019 23:06
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huhu posted:I'm 29 and have $26k in my 401k, $20k in VVI, and $12k in cash. I have no debts. I put about $12k into a stock purchase program every 6 months through work and get about $3k profit on it. I then have $15k showing up in my bank account every 6 months. What would you recommend doing with this money? Looking for both safe options and riskier/interesting options like investing in property/businesses/etc..
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Dec 24, 2019 23:07
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The Secure Act is supposedly helping people to kickstart their retirement savings by giving small businesses incentives to start 401k programs. Wouldn't it be a lot simpler and easier to just let people pack away 20 grand a year into their IRA? Fuckers.
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Dec 24, 2019 23:35
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The issue I see in the secure act is the shifting of responsibility for annuities. Once signed, sealed and delivered the responsibility will shift from the fiduciary to insurance companies. I don’t trust insurance companies as a whole and could be biased, but I suspect there will be a push to get people to invest in poor performing annuities that will be as useful as the darling of the insurance industry the “whole life” insurance policy. Posting on mobile so please forgive any errors.
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Dec 25, 2019 00:07
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Mu Zeta posted:The Secure Act is supposedly helping people to kickstart their retirement savings by giving small businesses incentives to start 401k programs. Wouldn't it be a lot simpler and easier to just let people pack away 20 grand a year into their IRA?
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Dec 26, 2019 00:53
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Small White Dragon posted:I agree that it sucks that how much tax-advantaged retirement space you have is tied to your employer, but I think the ultimate goal is to hopefully get most people auto-enrolled so money is automatically withheld for retirement; that's harder to do in the IRA space. They could not be chicken shits and reform it in a meaningful way making it streamlined to make ira's and 401k's basically the same thing and allow companies to deposit directly.
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Dec 26, 2019 01:07
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The easiest way to get more people to a stable retirement is to expand social security not more tax advantaged savings that mainly go to the upper middle class and above
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Dec 26, 2019 02:45
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